STOCK-BASED COMPENSATION

3 Months Ended

Mar. 31, 2018

NOTE M — STOCK-BASED COMPENSATION

The Hanger, Inc. 2016 Omnibus Incentive Plan (the “2016 Plan”) as originally adopted by our Board of Directors (the “Board”) in April 2016 authorized 2,250,000 shares of Common Stock, plus (1) the number of shares available for issuance under our prior equity incentive plan, the Hanger, Inc. 2010 Omnibus Incentive Plan (the “2010 Plan”) that had not been made subject to outstanding awards as of the effective date of the 2016 Plan and (2) any shares that would have become available again for new grants under the terms of the 2010 Plan if such plan were still in effect.

We have estimated that the shares available for issuance under the 2016 Plan would not be sufficient to cover the equity award grants expected to be made to our directors, officers and employees through the remainder of 2018 and in connection with our annual equity award grants in March 2019. Therefore, on May 9, 2018, the Board adopted an amendment to the 2016 Plan that authorized the issuance of up to an additional 375,000 shares of our common stock.

For the three months ended March 31, 2018 and 2017, we recognized a total of approximately $2.6 million and $2.2 million, respectively, of stock-based compensation expense. Stock compensation expense, net of forfeitures, relates to restricted stock units, performance-based restricted stock units, and stock options.

The summary of restricted stock units, performance-based restricted stock units, and weighted average grant date fair values are as follows:

	Employee Service-Based Awards				Employee Performance-Based Awards				Director Awards
	Units		Weighted Average Grant Date Fair Value		Units		Weighted Average Grant Date Fair Value		Units		Weighted Average Grant Date Fair Value
Nonvested at December 31, 2017	1,183,039		$	14.30	632,636		$	18.87	98,406		$	12.66
Granted	560,657		15.68		267,522		17.93		—		—
Vested	(352,106	)	16.14		(135,200	)	25.95		(21,928	)	12.77
Forfeited	(47,808	)	12.58		(26,479	)	18.38		—		—

Nonvested at March 31, 2018	1,343,782		$	14.45	738,479		$	17.25	76,478		$	12.63

There was no option activity during the three months ended March 31, 2018.